Critical Illness Rider Benefit in Life Insurance Policy

If any “critical” illness affects the life insured, like cancer, heart attack, stroke, paralysis, etc. then the insurer would give the sum assured on diagnosis for the purpose of treatment to the life insurance policy holder. Hence this rider is NOT a death rider. It is purely a survival rider. The sum assured due for the Critical Illness would be paid out on diagnosis and not on treatment. So it doesn’t matter if you do not undergo any treatment also, you are still eligible for the rider benefit on diagnosis of any of the mentioned critical illnesses.
 
Rider is an additional benefit along a life insurance policy. It cannot be taken completely on its own. It is considered as an add-on benefit along with the base policy.
 
Usually a Critical Illness Rider covers certain specified diseases only if they did not exist prior to the life insurance policy commencement. It means that if you already had a heart attack and after that you take this policy with the Critical Illness Rider Benefit and suffer another heart attack, it may not be covered as it existed before the policy commencement. 
 
Important: Always check for the list of critical illnesses in the policy brochure – they vary from company to company
 
Let us consider an example:
 
Tarun Agarwal purchased a life insurance policy with Base Sum Assured of Rs 20, 00,000 and a Critical Illness Rider Benefit of an additional Rs 15, 00,000. However, an additional premium also needs to be paid for an additional benefit of rider.

 

Premium without rider

Rs 10000, for example

Premium with accidental rider

Rs 10000 + Rs 1000 = Rs 11000

 

Now, if Tarun suffers any of the mentioned critical illnesses like cancer, stroke, paralysis, etc. and survives, then he would get Rs 15,00,000 critical illness sum assured and the insurance policy would continue till the end of the policy term. However, the future premiums would be Rs 10,000 only and not Rs 11,000 as no further amount needs to be paid for the rider purpose after the claim.

However, if Tarun suffers a heart attack or a stroke and dies within a specified period like 30 to 90 days, varying from policy to policy, then nothing extra would be paid to the life insured other than the base sum assured of Rs 20,00,000. This is because Critical Illness Rider is a pure Survival rider and not a Death rider. The money is paid for speedy and effective recovery of the life insured and not for the family’s protection.

Conclusion:


This rider is beneficial in event of any of the critical illness as they are expensive and the money would be very helpful for recovery as it is a purely Survival Benefit rider and nothing might be paid if death occurs due to the critical illnesses. 

The difference between Critical Illness Rider Benefit and Health Insurance is, the former pays on diagnosis on any of the specific mentioned critical illnesses however the latter would only reimburse the amount already spent on treatment after hospitalization only. They both serve different purposes and are important in their own avenues.